That's why Cashin describes the event as the most disastrous moment economically in U.S. history.
This came up when King World News asked Cashin about the recent chatter about returning to the gold standard:
I think it would be an extraordinarily cold shower. I do know it is being discussed. There may be half steps that they can look at.
The most disastrous thing economically that happened in this country, happened in August of 1971, when they came off the gold exchange standard, whereby foreign governments and others could come in and present dollars and request gold.
When they went off that (the gold standard) there was no more discipline or control. That is what led to the huge inflation we saw in the 70s, and gave us a very spotty market. Volcker managed to wring most of that inflation out, very painfully. Now we are liquidating the debt of the housing bubble, and even some remaining debt from the dot com bubble.